TODA: Software for Multiple-Criteria Decisions

Introduction

The decision-making process is recurrent in any organization, no matter its size or type. A decision is “a course of action chosen by the decision maker as the most effective available to achieve a goal or goals to solve a problem that worries him” (Jones, 1964, p. 23). Deciding is an action in the daily routine of companies of any size, to such an extent that authors such as Ansoff (1965) and Simon (1976) view it as the essence of managerial activities and, fundamentally, a decision-making process, which in turn is an eminently human activity.

The end of the decision-making process results in a decision that, according to Drucker (1967), is a systematic process of clearly defined elements that follow the following steps:

• 1.

  Classifying the problem;

• 2.

  Defining the problem;

• 3.

  Specifying the answer to the problem;

• 4.

  Deciding what is right rather than acceptable in order to meet the boundary conditions;

• 5.

  Building into the decision the action to carry it out; and

• 6.

  Testing the validity and effectiveness of the decision against the actual course of events.

The purpose of this paper is to describe the use and application of the TODA (Trade-off Decision Analysis) method by comparing it with the AHP method through a case study. According to Robbins and Coulter (2015, p.123), as the decision maker does not have all the information necessary for the decision, his rationality is bounded and the result is that “managers satisfy rather than maximize. That is, they accept decisions that are ‘good enough’.

In the classical theory of management, linked to the positivist tradition of social science, rationality is defined as “the adequate choice from among alternatives and the suitable choice of a means of achieving set goals” (Oliveira, 1993, p.21). According to this concept, every decision should be made rationally, based on complete information on the company’s goals, plausible alternatives, the probable results of these alternatives and the importance of these results to the organization (Cho, 2003).

According to Etzioni (1964), decision theory, which is fundamentally prescriptive, prescribes the steps to a rational decision. There has been growing interest in linking it to descriptive theories, which register and analyze how and under which conditions decisions are made. For a choice to be rational from an economic viewpoint, it is necessary for it to have the following characteristics:

• 1.

  Be complete, meaning that an individual must be capable of choosing from alternatives, e.g., should be able to say whether he prefers or A or B;

• 2.

  Be transitive, meaning that if an individual is capable of perceiving that he prefers A to B, and B to C, then he must prefer A to C: (A > B > C → A > C).

Decision-making can also be viewed as an effort to resolve the dilemma of conflicting objectives, which impedes the existence of the “optimum solution” and leads to a search for the “best solution that can be arranged” (Schmidt, 2003).

A decision may contain one, two, or more criteria for choosing. When there is only one criterion, the rational choice is to maximize the criterion variable (lowest price, maximum deadline, lowest cost, etc.). When there are two or more criteria, the decision is referred to as a multiple-criteria decision and the problem of choice has to take the relative importance of each criterion into account. Making decisions based on a set of actions based on potentially conflicting criteria is known as multiple-criteria decision-making (MCDM) (Yoon & Hwang, 1995).